Drought Helps Fracking Foes Build Momentum for Recycling

Cracked, dry ground is seen where a pond normally stands in Crossville, Illinois. Photo: Daniel Acker/Bloomberg

July 23 (Bloomberg) -- The worst U.S. drought in a half
century is putting pressure on natural-gas drillers to conserve
the millions of gallons of water used in hydraulic fracturing to
free trapped gas and oil from underground rock.

From Texas to Colorado to Pennsylvania, farmers, activists
and opponents of the technique, also known as fracking, are
using the shortage of rain to push the industry to recycle water
and reduce usage -- efforts that could prove costly to the
industry.

One company, Devon Energy Corp., estimates that recycling
is as much as 75 percent costlier than pumping wastewater into
deep wells. That disposal method, common in the industry, has
also drawn complaints because it is linked to earthquakes.

“We just would like the oil and gas companies to figure
out better ways, maybe a better use of this water,” Bill
Midcap, renewable-energy development director at the Rocky
Mountain Farmers Union covering Wyoming, Colorado and New
Mexico, said in an interview. “It’s a concern about the future,
it is the concern about the price of water, as we look forward,
and also taking water away from agriculture.”

Environmentalists in Texas are lobbying the Legislature to
pass water-conservation requirements during next year’s session.
In Pennsylvania, the Susquehanna River Basin Commission on July
16 suspended water intake for companies including Talisman
Energy Inc., Chesapeake Energy Corp. and Exxon Mobil Corp.

Boosted Output

Fracking has boosted the nation’s output of natural gas,
pushing prices down more than 70 percent in the past four years
and toppling coal as the chief fuel to generate power. Gas has
helped cut electricity bills, reduce emissions of greenhouse
gases when producing power and lift employment in states with
large reserves, such as Colorado, Pennsylvania and Texas.

The nation’s biggest reserve of trapped gas is in the
Marcellus Shale, which stretches from New York to Tennessee.

“The vast majority of water used to aid in responsible
natural-gas development across Pennsylvania is treated and
recycled for future use,” Kathryn Klaber, the president of the
Marcellus Shale Coalition, a trade group representing gas
producers, said in an e-mail. “Wide-scale deployment of water-recycling technology, which was pioneered by Marcellus
operators, has further reduced the need to source fresh water
for well-completion activities.”

Marcellus Drillers

Marcellus drillers in Pennsylvania use less than a 10th of
a percent of the 9.48 billion gallons of water consumed every
day in the state, the Pennsylvania Environmental Protection
Department has reported.

Talisman, the Calgary-based company that operates in Texas
and Pennsylvania, said its fracking hasn’t been hampered by
water restrictions. “Significant amounts of rainfall” were
reported in the Texas region where it has rigs, and Marcellus
drilling was scaled back when gas prices fell, Berta Gomez, a
spokeswoman, said in an e-mail.

Natural gas for August delivery fell 0.3 cents to $3.078
per million British thermal units on the New York Mercantile
Exchange today. Futures have climbed 3 percent this year.

About 55 percent of the contiguous U.S. was in moderate to
extreme drought at the end of June, the highest percentage since
December 1956, according to the National Climatic Data Center on
July 17. Last month was the 14th-warmest ever and the 10th-driest June based on records going back to 1895, the center
said.

Requiring Recycling

Environment Texas, an Austin-based environmental group,
urged the state Legislature to pass bills requiring that water
be reused after fracking and limiting the amount of fresh water
that can be used.

“There are a lot of problems with fracking, and so we want
to minimize the damage from fracking, including by requiring
recycling,” Luke Metzger, the group’s director, said in an
interview.

Costs to haul fresh water for fracking has increased as the
drought forces drillers to buy from more distant suppliers,
according to Dave Burnett, director of technology at the Energy
Research Institute of Texas A&M University in College Station.
More companies are recycling wastewater and using brackish water
not suitable for drinking.

“The use of fresh groundwater in south Texas has dropped
by 50 percent in the last 12 months,” Burnett said in an
interview.

Recycling Costs

It costs about 7 cents a gallon to recycle drilling
wastewater for reuse, not counting transportation, Burnett said.

Recycling is 50 percent to 75 percent more expensive than
sending polluted water into deep wells, according to a
presentation given last month to Texas lawmakers by Devon Energy
and provided by the Legislature. Disposal of wastewater by
injecting it into deep wells, however, has been linked to
earthquakes -- something that has drawn the attention of
regulators.

Seismic events related to energy development have been
measured in Alabama, Arkansas, California, Colorado, Illinois,
Louisiana, Mississippi, Nebraska, Nevada, New Mexico, Ohio,
Oklahoma and Texas, according to a National Research Council
study.

Last year, Arkansas regulators shut four disposal wells in
the Fayetteville Shale, where companies are drilling for gas,
after an outbreak of earthquakes near the town of Guy, including
a magnitude-4.7 temblor. Drillers must now provide information
on the geology of disposal-well sites and avoid known faults
when planning wells.

Ohio Earthquakes

The Ohio Department of Natural Resources in March proposed
rules for wastewater disposal, including bans on drilling into
some rock formations and requiring geology reviews before wells
are approved. Beginning in March 2011, there have been 12
temblors near a disposal well in Youngstown, including a
magnitude-4 quake that struck on New Year’s Eve.

Metzger expects other states will follow whatever Texas
implements in regards to recycling.

“In this drought, especially in western states, local and
state governments are increasingly going to look to oil and gas
companies to recycle their water, in order to protect local
supplies,” he said.

State Representative Jim Keffer, a Republican, wrote
legislation that passed in Texas last year requiring operators
to disclose how much water they are using to frack a well. He
isn’t planning to add rules for conserving water, Ky Ash, his
chief of staff, said in an e-mail.

In northern Colorado, energy companies bought 3 percent of
the water auctioned by the Northern Colorado Water Conservancy
District on March 16, said Brian Werner, a spokesman for the
district. Farmers bought 92 percent and cities got the rest.

Drought conditions in the region this year mean less water
will be available in 2013, Werner said.